One of Dallas’ oldest regional shopping centers has been
handed over to lenders. The owners of Valley View Center mall
have quietly transferred title to the 37-year-old mall at LBJ
Freeway and Preston Road to a lender group headed by Bank of
America.

The shopping center, which in recent years has lost anchor
tenants, contains more than 1.6 million square feet and has
J.C.
Penney and Sears department stores. The mall is less than 75
percent leased.

Macerich Co., a California-based real
estate investment trust, declined to comment Wednesday on
why it gave up ownership of the shopping center.[No need to worry, you do realize that I have plenty of
comments on why it gave up ownership of the shopping mall,
don't you?]

The property is now in the hands of LNR Partners Inc., a
Florida special servicer of distressed real estate, Dallas
County deed records show. Macerich had a $125 million loan on
Valley View, which was due in January, the California-based
company’s financial filings show.

The monthly payments on the loan were $596,000. Dillard’s
and Macy’s both
closed large stores at Valley View, which has steadily lost
customers to newer shopping venues…

Macerich in 1996 paid more than $85 million to purchase
Valley View, then considered one of North Dallas’ most
successful shopping centers. In 2005, the shopping center
company spent $30 million to add a 16-screen AMC movie theater.
[This was one year before the top of the bubble.
Absolutely impeccable timing!]

And in recent years, Macerich has worked on plans to
redevelop Valley View and considered tearing down parts of the
old mall and incorporating residential and office space.[Exactly what is needed in an residential housing
commercial real estate glut to maximize that
ROI!]

The results of these activities have been congealed in our
analysis of Macerich’s entire portfolio of properties (118+
properties), including wholly owned, joint ventures, new
developments, unconsolidated and off balance sheet properties.
Below is an excerpt of the full analysis that I am including in
the updated Macerich forensic analysis. This
sampling illustrates the damage done to equity upon the bursting
of an credit binging bubble. Click any chart to enlarge (you
may need to click the graphic again with your mouse to enlarge
further).

Notice the loan to value ratios of the properties acquired
between 2002 and 2007. What you see is the result of the CMBS
bubble, with LTVs as high as 158%. At least 17 of the
properties listed above with LTV’s above 100% should (and
probably will, in due time) be totally written off, for they
have significant negative equity. We are talking about wiping
out properties with an acquisition cost of nearly $3
BILLION, and we are just getting started for this ia
very small sampling of the property analysis. There are dozens
of additional properties with LTVs considerably above the high
watermark for feasible refinancing, thus implying significant
equity infusions needed to rollover debt and/or highly punitive
refinancing rates. Now, if you recall my congratulatory post on
Goldman Sachs (please
see Reggie Middleton Personally Contragulates Goldman, but
Questions How Much More Can Be Pulled Off), the WSJ
reported that the market will now willingly refinance mall
portfolio properties 50% LTV, considerably down from the 70%
LTV level that was seen in the heyday of this Asset Securitization Crisis. Even if we were to
assume that we are still in the midst of the credit bubble and
REITs can still refi at 70LTV (both assumptions patently
wrong), rents, net operating income and cap rates have moved so
far to the adverse direction that MAC STILL would not be able
to rollover the debt in roughly 37 properties (31% of the
portfolio) whose LTVs are above the 70% mark – and that’s assuming the
credit bubble returns and banks go all out on risk and CMBS
trading. Rather wishful thinking, I
believe we can all agree.

For those of you who didn’t catch it in the table above, I’ll
blow it up for you…